This the second article which rounds out the issues covered in the previous post.
If you want to know why these issues of ratings and insuring continuity are important, I direct the reader to this article about on-line file hosting site Carbonite.
So, as I stated in the first post of this series, I was booked by what looked like a large, well financed client; well, as my client’s went (with the exception of France Telecom) they were large-ish. These folks were a 100+ year old regional insurance company that specialized in professional lines. What’s that, you ask? Professional and specialty underwriters serve, well, professions, verticals, and businesses. They usually are not auto, home, or life insurers, but they are often resold by multiline carriers. Why should you know this? Huh!
Professional lines insure business operations risks with certain carriers targeting coverage by profession; their expertise and actuarial models require specialization in order to correctly price the risk of business interruption, and to price the premiums and payouts that indemnify the customers of professional and industrial services operations. One simple example: field service coverage, in which the technical organization are covered against customer claims of damages, losses, and liabilities that occur in the course of repairing equipment. The other side is, of course, simple coverage for interruption of operations. Some engineering disciplines (Civil, structural, design, architectural, aviation, you get the idea) can buy coverage for E&O (errors and omissions).
Ya Ya, what does this have to with hosted services and SAAS PAAS Cloud? Answer: Insuring business continuity was a game of physical premises insurance, which evolved into records and facilities, and now, today, optionally covers servers, workstations. software, and systems. It is a mishmash of offerings, and many industries have varying degrees of dependencies on internal IT infrastructure. The insurance products for Small and Medium businesses are semi-flexible, while mega enterprises have core needs that exceed what professional lines can provide, and instead rely on customized underwriting for the Fortune 1000. Continue reading
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